Kadiha invested $10,000 in a balanced fund 10 years ago, which she put into a non-registered account. At the time, her insurance agent sold her the fund with a 75% maturity and death benefit guarantee. Today, when the fund expires, the market value is $5,000.
How much will Kadiha receive, and how will her funds be treated for tax purposes?

• A. $7,500, of which $2,500 will be taxed as interest income.
• B. $7,500, tax free.
• C. $7,500, of which $2,500 will be taxed as capital gain.
• D. $7,500, of which $2,500 will be taxed as interest, dividend, and capital gain.

Li Jun, 50, applies for a $250,000 critical illness (CI) insurance policy with his insurance agent Ming. On the application, Li Jun states that he must take pills daily to manage his hypertension. Aside from this, his health is good. Given his age and hypertension issue, he is worried that the insurer may refuse his application.
What does Ming CORRECTLY advise him?

• A. The policy will likely be issued with an exclusion.
• B. The policy will likely be issued with a premium rating.
• C. The policy will likely be denied.
• D. The policy will likely be issued with a lower benefit.

Ten years ago, Albert purchased a life insurance policy and designated his brother Stephen as the sole beneficiary. Albert is single and Stephen is his only family. Albert is a frequent traveler and enjoys doing exotic sports in South Africa. During his trip in South Africa in July 2019, there was a heavy earthquake in the region and a lot of the buildings fell apart. It was reported that Albert could be drinking in one of the restaurants when the disaster happened. His body was not located at that time. The South African government declared the incident as a national disaster. After the incident, Stephen got a letter from the life insurance company indicating Albert's life insurance was in grace period and a payment was required or it will lapse on August 15, 2019. Two weeks have passedsince the mail arrived and the grace period is over. The policy is now lapsed because Stephen was occupied with Albert's disappearance. On October 1, 2019, Albert's body is finally located in one of the building ashes. The coroner's report indicated he died when the building collapsed. What should Stephen do to handle the life insurance matter?

• A. Stephen would not be able to make a claim because the policy already lapsed.
• B. Stephen could bring the policy back in force by telling the insurance company what happened and start paying the premium again.
• C. Stephen would not be able to make a claim because the coroner's report came out after the policy lapsed.
• D. Stephen should make a death claim because Albert died on the day when the earthquake occurred.

John purchased a permanent life insurance policy for his grandson, Richard, when Richard was born 28 years ago. This policy has increased in death benefit over time and holds sizeable cash value. Now that Richard is older, John would like to transfer this policy to him as he now is working and has a family.
What does John need to know about this transfer in relation to tax implication?

• A. John is not responsible for any disposition triggered by Richard as they will be taxable to Richard only.
• B. The transfer will be done when Richard pays consideration to John for fair market value of the policy.
• C. The transfer will be done with tax implication as Richard isn't his child.
• D. John should roll this policy over to Richard's father first, then Richard's father should roll it over to Richard without tax implication.

Melissa, a La Tranquillite representative, is meeting with a client who tells her about something that happened to one of her friends. While she was taking part in an outdoor weekend at Mont-Tremblant Park, a forest fire broke out and one of the participants was never found. The client is about to take out life insurance with Melissa. She asks Melissa what would happen to her insurance capital in such a situation. What can Melissa tell the client?

• A. The insurer would pay the insurance face amount within 30 days of the claim
• B. The beneficiary could receive the insurance face amount after a certain number of years and after receiving the judgment for the declaration of death
• C. The contract premiums would be reimbursed to the beneficiary because the contract would be null and void
• D. It would be impossible to pay the insurance face amount if the victim's body is not found